SEC: Brokerage Firm Charged With Anti-Money Laundering Failures

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June 1, 2016

The Securities and Exchange Commission today charged a Wall Street-based brokerage firm with failing to sufficiently evaluate or monitor customers’ trading for suspicious activity as required under the federal securities laws.
An SEC investigation found that Albert Fried & Company failed to file Suspicious Activity Reports (SARs) with bank regulators for more than five years despite red flags tied to its customers’ high-volume liquidations of low-priced securities.  On more than one occasion, an AF&Co customer’s trading in a security on a given day exceeded 80 percent of the overall market volume.  In other instances, customers were trading in stocks issued by companies that were delinquent in their regulatory filings or involved in questionable penny stock promotional campaigns.  Certain customers also were the subject of grand jury subpoenas received by AF&Co.
AF&Co agreed to pay a $300,000 penalty to settle the charges.